Groupe PSA’s captive, Banque PSA Finance, and its Chinese manufacturing partner, DongFeng Motor Corp., have formed a leasing joint venture to attract millennials.
The two companies already operate jointly in China as DongFeng Peugeot Citroën (DPCA), with a lending captive called DongFeng Peugeot Citroën Auto Finance Co. (DPCAFC). “The emergence of millennials as future core auto consumers in China looking more for flexibility and usage (versus valuing ownership) will be a key market driver for the rapid development of the leasing market in China,” a Groupe PSA spokesman told AFN.
The new leasing captive plans to support the development of mobility services in China, although the spokesman declined to provide a timeline or specify what services would be offered. The new leasing captive will maintain the same ownership structure as DPCAFC, with DPCA maintaining 50% ownership, and DongFeng and Banque PSA Finance splitting the remainder. DongFeng Motor Corp. did not respond to requests for comment.
Despite being the world’s largest market for auto sales, China is still in the early stage of development for finance, especially when it comes to leasing. In 2016, the Chinese auto market is estimated to have generated 600,000 leases, about 2.5% of all sales. By comparison, 38% of vehicle sales were financed with loans, according to a December 2017 report from KPMG.
“We expect that by 2022, the leasing market will grow to 15% of [passenger vehicle] sales and become a key point in the automotive value chain,” the Group PSA spokesman said. Last year, DPCAFC financed 40.7% of DPCA sales — 182,449 new and used vehicles — up from 27.2% in 2016.
